Emerging Issues in Microfinance by niusheng

VIEWS: 65 PAGES: 7

									What is the amount of your loan?         What is the weekly instalment on your loan, as written in your contract?
                (% of respondents)                                                         Adjusting for collection
                                                                           As written in   of savings (Rs. 12) in     Within 10% of their
Right Answer        96.5%
                                                                          loan contract          the South             weekly amount
Wrong Answer         3.5%
                                         Right Answer                       42.5%                 66.0%                    84.5%
What is the duration of your loan?       Wrong Answer                       52.0%                 28.5%                    10.0%
                (% of respondents)       Tried But Does Not Know             0.0%                  0.0%                     0.0%
Right Answer        89.0%                Did Not Try and Does Not Know       1.5%                  1.5%                     1.5%
Wrong Answer        11.0%                Blank                               4.0%                  4.0%                     4.0%




1
 Sa-dhan is an association of microfinance institutions in India. The voluntary code of conduct is available here:
http://www.sa-dhan.net/corevalues.pdf
                   Annualised Interest per Rs. 1,000 of Loan, as                                           Annualised Rate of Interest, as reported by
                            reported by respondents                                                   80                 respondents
                                                                                                                                                     % in




                                                                                          Frequency
              80                                                         Interest                     60
                                                                                                                                                     North -
  Frequency




                                                    Interest in
              60                                                         in North-                    40                                             18%
                                                    South- Rs.
              40                                                         Rs. 180                                                           % in South-
                                                        150                                           20
              20                                                                                                                              15%
              0                                                                                       0




                                                                                                                1
                                                                                                              1.2
                                                                                                            1.25
                                                                                                              1.5
                                                                                                                2
                                                                                                              2.3
                                                                                                              2.5
                                                                                                                5
                                                                                                                6
                                                                                                              10
                                                                                                              14
                                                                                                              15
                                                                                                              21
                                                                                                            -999
                                                                                                            -444
                                          25
                                               50
                                                     100
                                                           125
                                                                  150
                                                                        175
                                                                              200
                                                                                    250
                     -999
                            -444
                                   -111




                            Interest per Rs. 1,000 of loan (in Rs.)                                                annualised rate of interest (in %)

-999: Did not try and does not know
-444: Tried and does not know



What is the total interest on this loan that you
are required to pay over the time of this loan?
Right Answer                                  13.5%
Wrong Answer                                  48.5%
Tried But Does Not Know                       16.0%
Did Not Try and Does Not Know                 21.0%
Blank                                          1.0%




                                                                                                                           (% of respondents who said the
Scenarios                                                                                                                      action was appropriate)
In case Lakshmi is not able to pay her loan and centre manager                                                                         42%
insists on holding the meeting outside her house. What do you
think about the centre manager's action?
If Lakshmi doesn’t repay her loan in your group, do you think its                                                                      45%
appropriate to extend the meeting for another 30 mts to enforce the
repayment?
If Lakshmi doesn’t repay her loan in your group, do you think its                                                                      33%
appropriate to extend the meeting for another 3 hours to enforce the
repayment?
Lets say that Lakshmi is not able to repay her loan. Would it be                                                                       54%
okay for the MFI to take any of her assets, such as for instance, any
cows she owns, her house her land or machinery she uses for work?
Table 1 – Business characteristics of sample population
                                               Percentage   Average          Profits per day*
                                               of           amount
                     Detail                    respondents purchased*
1. One trip a day to the market- normal days          89.7%      Rs. 1075.3          Rs.110.5
                                                                     (589.2)            (54.7)

2. Twice or more trips a day( total amount            8%           Rs.707.5           Rs.95.6
   purchased per day)                                               (422.6)            (46.1)

3. Once in two days trip to the market               2.3%        Rs. 1034.8           Rs.97.2
   (amount purchased per trip)                                       (515.8)           (44.3)

4. Good days a week                                 98.9%        Rs. 1666.3         Rs. 186.6
                                                                     (834.3)            (83.4)
5. Festival days                                    91.5%        Rs. 2580.7         Rs. 318.2
                                                                   (1543.7)           (187.3)
Table 2 – Buying on credit
1. % of sample size that buys goods on credit                                                         40%

2. % of sample size that buys goods on credit for more than 15 days a month                           34.6%
3. Average number of days in a month that the respondent buys goods on credit                         19.9 days
4. Average number of years of buying goods on credit                                                  13.4 years
5. Average premium paid for goods bought on credit*                                                   17.3%
6. Average of maximum that can be bought on credit                                                    Rs. 3420
7. Alternate to buying on credit
    a. another moneylender                                                                             72.25%
    b. friend                                                                                          3.75%
    c. family/relatives                                                                                1.75%
    d. no one else                                                                                     24%


Table 3 – Meter loans for financing
1. % of sample size that takes daily loans                                                               69.4%
2. % of sample size that takes daily loans for more than 15 days a month                                 65.7%
3. Average number of days in a month that respondent takes a daily loan for working                      25.8 days
   capital
4. Average number of years of taking daily loans                                  9.5 years
5. Average daily interest rate                                                    4.9%
6. % of total meter loan borrowers who borrow from the same moneylender daily     67.7%
7. Average of maximum that can be borrowed as a daily loan                        Rs.
                                                                                  4098.6
8. % of meter loan borrowers who feel there is no other way of doing business and 63.8%
   the interest is unavoidable

Table 4 – Usage of savings products
                                  Usage by
                                respondents
       Savings product              (in %)
                Cash at home             77.5
                 Cash lent out             5.7
 Cash saved with family/friends            1.5
                    Chit funds           11.2
                     MFI/SHG             29.2
                Bank account             12.8
                           Gold          74.6




2
  1000 Rs borrowed for 30 days a month at the average 4.9% rate of daily interest. 1000 Rs is close to the sample
average for working capital on a normal day for those who make one trip a day. This is not taking into account
variations in working capital needs on good days, low season and festival days.
3
  Income calculations are made on the assumption, that the average respondent takes home 110 Rs daily.

								
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